The Parliamentary Standing Committee on Finance has asked the Securities and Exchange Board of India (Sebi) the reason for not allowing MCX Stock Exchange (MCX-SX) to start operations in equity, derivative and mutual fund segment.
The committee headed by senior BJP leader and former finance minister Yashwant Sinha, which interacted with the top bankers and financial regulators for two days in Mumbai this week, also wanted to know from the regulator the number of new stock exchanges that have been allowed to operate so far in the country.
A member of Parliament who was privy to the discussion told FE that the committee has given 12 days to those with whom it has held discussions to furnish their replies on the queries raised. Additionally, Sebi has been asked to furnish details of the specific steps initiated by it in the recent past for better regulation of capital market and protection of investors interest within the said period. Sebi officials declined to comment on the issue.
Further, the committee interacted with the top brass of Life Insurance Corporation of India, Bank of Baroda and Central Bank of India among others to deliberate on the recent ?bribe for loan? scam.
The Parliamentary committee?s query on the reasons for the rejection of the MCX-SX application assumes significance as the exchange has already approached the Bombay High Court challenging the regulator?s order. In September 2010, the regulator had issued an order rejecting MCX-SX application to commence equity operations on the grounds that the exchange is not fully MIMPS compliant.
While rejecting the application of the exchange, Sebi in its September 2010 order had said MCX-SX has been ?dishonest? in withholding material information on ownership (arrangements) and has therefore not adhered to fair and reasonable standards of honesty expected from a recognised stock exchange.
Besides, the committee also raised queries on the measures taken by the regulator to encourage greater retail participation besides steps initiated to minimise investor grievances and their impact.
The MP who spoke to this paper also said that greater emphasis was laid on banks? exposure to social sectors and covering the unbanked areas under the ongoing financial inclusion programme.